Netflix wins international Crown with original shows

The Netflix logo is pictured on a television in this
illustration photograph taken in Encinitas
CaliforniaThomson
Reuters

Twenty years after Reed Hastings cofounded Netflix, and a decade
after the company introduced video streaming, it hit another
milestone - one that is key to its ability to sustain its
scorching pace of growth.

International subscriber count of 52.03 million at the end of the
June quarter eclipsed domestic customer numbers of 51.9 million,
Netflix said on Monday.

The company's shares were up 10.5% at $178.7 in Tuesday premarket
trading, on track to add over $7 billion to Netflix's $70 billion
market value.

Morgan Stanley and JPMorgan - the two brokerages most bullish on
Netflix's stock - each raised their price target to $210.

"We believe the rapidly growing content offering led by originals
that in aggregate garnered 91 Emmy nominations last week, drove
the stronger new sign-ups," Morgan Stanley analysts wrote in a
research note.

This year, original TV shows "Stranger Things", "The Crown" and
the latest season of Kevin Spacey-starrer "House of Cards,"
received Emmy nominations and brought in more customers than
Netflix had predicted for the second quarter.

The company, which has over 100 million customers globally, added
4.1 million monthly subscribers in international markets in the
latest quarter, handsomely beating the average analyst estimate
of 2.6 million, according to data from analytics firm FactSet.

In the US, it signed up 1.07 million subscribers, compared with
analysts' expectations of 631,000.

Netflix has often been criticized for spending too much on
content as it tries to aggressively gain subscribers outside the
United States.

The company said earlier it planned to spend about $6 billion
this year for original shows and expected to have negative free
cash flow of $2 billion to $2.5 billion.

But most analysts backed the company's strategy favoring scale
over profit.

"The company's content strategy continues to deliver results, and
we liken Netflix's apparent mentality around cash flow (spend as
much as makes sense within a modest cash burn and leverage
framework) to Amazon's mentality around profit," Canaccord
Genuity analysts wrote in a broker note.

At least 10 brokerages raised their price targets on Netflix. The
median price target is $185.

Of the 41 analysts covering Netflix's stock, 24 have a "buy" or
higher rating. Fifteen have a "hold" rating and two a "sell" or
lower.

Netflix's shares had risen about 30% this year, up to Monday's
close, versus a roughly 10% increase in the Nasdaq Composite.

(Reporting by Supantha Mukherjee in Bengaluru; Editing by
Sayantani Ghosh)